20151202AVU to Staff 6.doc

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 12/02/2015
CASE NO: AVU-G-15-03 WITNESS: N/A
REQUESTER: IPUC RESPONDER: Mike Dillon
TYPE: Production Request DEPARTMENT: DSM
REQUEST NO.: Staff-06 TELEPHONE: [phone]

REQUEST:

Please describe how the Company uses net-to-gross estimates when determining whether to implement and how to manage natural gas conservation programs. If the Company does not consider net-to-gross estimates, please explain why not. Furthermore, please estimate how applying a net-to-gross to the UCT could impact cost-effectiveness.

RESPONSE:

Since a net-to-gross adjustment measures the motivation of why an energy efficiency measure was acquired by a customer it adjusts both the value of the conservation savings as well as the customer incremental cost. In a net TRC that provides a reduction in both the numerator and the denominator of a B/C ratio calculation, the reduction does not completely cancel out due to the presence of Non-energy impacts and programmatic costs in both the numerator and denominator.

Since the UCT is only looking at the benefits of conservation in the numerator and the costs the utility pays to acquire that conservation from incentives and programmatic costs in the denominator, a net-to-gross adjustment would be a direct reduction in the UCT (i.e. UCT = 2.0, net-to-gross ratio of 0.7 would yield a net UCT of 1.4).